Question By Question Guidance This survey is divided into seven sections based on subject matter. You may need to collaborate with colleagues in different departments to complete all sections. Some questions in these instructions may not apply to your company as this survey is administered to companies in a diverse set of industries. Table of Contents General Instructions Section 1: Company Information Section 2: R&D Paid For by Your Company Section 3: Costs Paid For by Others Section 4: Capital Expenditures Section 5: Management and Strategy of R&D Section 6: Human Resources Section 7: Tax Topics General Instructions What is Research and Development (R&D)? Research and development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge. This includes a) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research); b) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research); and c) systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new products or processes or to improving existing products or processes (development). R&D includes both direct costs such as salaries of researchers as well as administrative and overhead costs clearly associated with the company’s R&D. The term R&D does NOT include expenditures for: • Costs for routine product testing, quality control, and technical services unless they are an integral part of an R&D project
Transcript
Question By Question Guidance
This survey is divided into seven sections based on subject matter. You may need to collaborate with colleagues in different departments to complete all sections. Some questions in these instructions may not apply to your company as this survey is administered to companies in a diverse set of industries.
Table of Contents
General Instructions
Section 1: Company Information
Section 2: R&D Paid For by Your Company
Section 3: Costs Paid For by Others
Section 4: Capital Expenditures
Section 5: Management and Strategy of R&D
Section 6: Human Resources
Section 7: Tax Topics
General Instructions
What is Research and Development (R&D)? Research and development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge and to devise new applications of available knowledge. This includes a) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research); b) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research); and c) systematic work, drawing on research and practical experience and resulting in additional knowledge, which is directed to producing new products or processes or to improving existing products or processes (development). R&D includes both direct costs such as salaries of researchers as well as administrative and overhead costs clearly associated with the company’s R&D.
The term R&D does NOT include expenditures for:
• Costs for routine product testing, quality control, and technical services unless they are an integral part of an R&D project
• Market research • Efficiency surveys or management studies • Literary, artistic, or historical projects, such as films, music, or books and other
publications • Prospecting or exploration for natural resources
Does R&D include development of software and Internet applications? Research and development activity in software and Internet applications refers only to activities with an element of uncertainty and that are intended to close knowledge gaps and meet scientific and technological needs. Report in this survey all software R&D as defined here regardless of the eventual user (internal or external).
R&D activity in software INCLUDES:
• Software development or improvement activities that expand scientific or technological knowledge
• Construction of new theories and algorithms in the field of computer science
R&D activity in software EXCLUDES:
• Software development that does not depend on a scientific or technological advance, such as
o Supporting or adapting existing systems o Adding functionality to existing application programs, and o Routine debugging of existing systems and software
• Creation of new software based on known methods and applications
• Conversion or translation of existing software and software languages
• Adaptation of a product to a specific client, unless knowledge that significantly improved the base program was added in that process
Reporting Unit The reporting unit is your company, including all subsidiaries and divisions regardless of location. Include only subsidiary companies where there is more than 50 percent ownership. If you are owned by a foreign parent, the reporting unit for the survey is your U.S.-located company, including all your majority-owned subsidiaries and divisions regardless of location. For reporting purposes, your foreign parent and any foreign affiliates your company does not own should be treated the same as any business partner, customer, or supplier you do not own.
Inter-company transactions
Reporting for “worldwide activities”- The reporting unit is your company, including all domestic and foreign subsidiaries that are more than 50% owned by your company for financial reporting purposes. All transactions between subdivisions within this reporting unit should be eliminated as inter-company transactions. For reporting purposes, your foreign parent (if you are foreign owned) and any foreign affiliates your company does not own by more than 50%, should not be treated as part of ‘your company’ in your report. Transactions with these units should be treated the same as with any unrelated third parties such as business partners, customers, or suppliers you do not own.
Reporting for “domestic operations”- In this survey “domestic operations” refers to your company’s operations located in the 50 United States and District of Columbia. When reporting for your domestic operations, include transactions with foreign subsidiaries. For example, Question 1-13 asks how much of your company’s total sales and revenues were from your company’s domestic operations. All revenue from the domestic operations, including sales to subsidiaries or affiliated companies overseas, should be reported in this question.
Reporting period Report data for the calendar year 2019, if possible, or for your company’s fiscal year ending between April 2019 and March 2020.
Estimates are acceptable Please report all items to the best of your ability.
To speak with a survey specialist, call 1-800-772-7851. Survey specialists are available Monday through Friday, from 8:00 a.m. to 5:00 p.m. Eastern time, to help with any questions you may have
If your answer is “Yes”, enter the date that your company ceased operations.
REPORTING INSTRUCTIONS:
If your company ceased operations between April 1, 2019 and December 31, 2019, report only for the period January 1, 2019 to the date your company ceased operations. If your company ceased operations before April 1, 2019, complete Question 1-1 and return this form to the Census Bureau – you are not required to complete the rest of this survey.
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1-2 Did another U.S. company other than a holding company own more than 50 percent of the voting interest in your company during 2019?
Question 1-2 asks about the majority of the ownership of the voting interest of the company receiving the survey. Special reporting instructions apply to companies that have been acquired by another company. If your answer is “No”, continue to Question 1-3. If your answer is “Yes”, read the instructions below, enter the name of the parent company, the EIN of the owner, and the date that your parent company purchased your company.
REPORTING INSTRUCTIONS FOR U.S.-OWNED COMPANIES:
If your company was purchased between April 1, 2019 and December 31, 2019, report only for the period January 1, 2019 to the date of purchase. If your company was purchased before April 1, 2019, complete Question 1-7 and return this form to the Census Bureau – you are not required to complete the rest of this survey unless your owner instructs you to complete this survey.
Example 1: Company A was acquired by Company P (a U.S. company) on Feb. 1, 2019. Because Company A was acquired by a U.S. company prior to April 1, 2019, Company A is not required to complete this survey. Company A will answer Question 1-7 and return the form to the Census Bureau.
Example 2: Company B is acquired by Company P (a U.S. company) on July 1, 2019. Because Company B was acquired by a U.S. company on or after April 1, 2019, Company B must complete the survey, reporting data for the period January 1, 2019 through July 1, 2019.
The Census Bureau has determined that for this survey the benefit of collecting data from a company for a period less than one quarter of a year does not outweigh the burden placed on the company to report the data.
Why is this important?
Companies are asked this question for three reasons: to eliminate double counting in cases where both parties in a business acquisition receive the survey; to guide foreign-owned companies to special instructions; and to reduce the burden on companies who would otherwise be reporting data for a period less than one quarter of the year.
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1-3 Will the information in this survey be reported for the 2019 calendar year?
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1-4 Was your company a majority-owned subsidiary of a foreign company in 2019?
Question 1-4 asks about the ownership of the company receiving the survey. Special reporting instructions apply to companies that were majority-owned by a foreign company. If your answer is “No”, continue to Question 1-5. If your answer is “Yes”, read the instructions below and enter the name of the parent company then proceed to Question 1-5.
REPORTING INSTRUCTIONS FOR FOREIGN-OWNED COMPANIES:
If your company is owned by a foreign parent, the reporting unit for the survey is your U.S.- located company, including all your majority-owned subsidiaries and divisions regardless of location. For reporting purposes, your foreign parent and any foreign affiliates your company doe s not own should be treated the same as any business partner, customer, or supplier you do not own.
If you pay your foreign parent for R&D services, those costs should be included in your responses in Section 2 as “costs for purchased R&D services.”
If your foreign parent pays or reimburses your company for R&D services, the costs for this R&D should be included in your responses in Section 3 as “costs funded, paid for, or reimbursed by others.”
Report your survey data using U.S. Generally Accepted Accounting Principles (U.S. GAAP) as recognized by the Financial Accounting Standard Board (FASB). If your
company follows International Financial Reporting Standards (IFRS), we request that you estimate any adjustments that would be required to conform to U.S. GAAP.
Companies are instructed to include/consolidate data for their foreign subsidiaries on this survey. The reporting unit is your company, including all domestic and foreign subsidiaries in which your company owns more than 50 percent of the voting interest.
Entities in which your company does not have more than 50% ownership stake should not be included in this report as part of ‘your company’. Transactions with entities in which your company does not have more than 50% ownership stake should be reported as if they were unrelated, third parties.
Why is this important? This information is needed in order to accurately measure the impact of globalization on R&D and innovation
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1-5 Did your company own more than 50 percent of any company operations or subsidiaries outside the 50 United States and D.C. during 2019?
Companies are instructed to include/consolidate data for their foreign subsidiaries on this survey. The reporting unit is your company, including all domestic and foreign subsidiaries in which your company owns more than 50 percent of the voting interest.
Entities in which your company does not have more than 50% ownership stake should not be included in this report as part of ‘your company’. Transactions with entities in which your company does not have more than 50% ownership stake should be reported as if they were unrelated, third parties.
Why is this important? This information is needed in order to accurately measure the impact of globalization on R&D and innovation
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1-6 Did your company have discontinued operations in 2019?
Companies are instructed to include data for discontinued operations on this survey.
If your answer is “Yes”, include data for these operations in your survey responses, and continue to Question 1-7. If your answer is “No”, continue to Question 1-7.
Why is this important? This information is needed in order to accurately measure the total activity of companies operating in the United States in 2019.
The survey coordinator is the person at your company responsible for gathering all requested information, ensuring instructions are followed, and submitting the completed survey. The survey coordinator may not be able to personally complete the entire survey and may need to request information from other knowledgeable resources concerning your company’s R&D, accounting, human resources, and legal matters.
Enter the following contact information for the survey coordinator: name, title, telephone number, and email address.
Why is this important?
This information gives the Census Bureau a single point of contact at each company surveyed in case questions arise about survey responses. The point of contact for this survey may differ from that for other Census Bureau surveys.
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1-8 What was the total number of worldwide employees working at your company for the pay period that included March 12, 2019?
Question 1-8 asks the company to report its total number of employees (both R&D and non-R&D employees) for all locations, both foreign and domestic. In order to collect consistent data from all companies, the employment figure reported should be for the pay period that included March 12, 2019. If this is not possible, companies should report employment for the date closest to March 12, 2019.
Leased or temporary employees and consultants should be excluded from this question because this survey does not consider them employees of the reporting company.
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1-9 How many of the employees reported in Question 1-8 were employees of your company’s domestic operations and foreign operations?
Question 1-9 asks the company to report, of the employees reported in Question 1-8, the number of employees employed by domestic operations and the number of employees that were employed by operations outside of the United States.
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Business codes
1-10 Please describe your company’s primary business activity during 2019.
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1-11 List all applicable business codes in which your company operated worldwide in 2019? NOTE: These codes will be used to describe both business activities and R&D activities and may differ from industry codes used by other government surveys and reports. Typing in the description field will generate a list of possible matching business codes from which to choose. https://www.census.gov/programs-surveys/brds/information/brdshelp/business-codes.html
Question 1-11 asks the company receiving the survey to identify all of its worldwide businesses in 2019. Most companies only have one business (such as making engine parts or providing tax preparation services) and so would only report one code for Question 1-11. Larger companies, however, sometimes operate in more than one business. These companies should select the business codes from the list that best match how they define their various businesses.
If more than one of the company’s businesses falls under one of the listed business codes, the company should group those businesses together on the survey. For example, a company may have an office software business and a video game software business. For the purpose of this survey the company would group those two businesses together and report using the code for “Software publishers (except Internet)” (51120).
If more than one of the listed business codes applies to one of the company’s businesses, the company should estimate what percentage of its business falls under each applicable code. For example, a company may have a “healthcare” business that includes diagnostic devices and diagnostic substances. For this survey the company should report its healthcare business in two codes: 33451 (Electro-medical, electrotherapeutic, and irradiation apparatus manufacturing) and 32542 (In vitro diagnostic substances manufacturing). If this is not possible, the company may pick the
one code that is the closest match or that accounts for the largest share of its business. In either case, company should note what action was taken in the space for "Remarks" at the end of the survey.
Why is this important?
This information is needed in order to tabulate more accurate and useful industry-level data.
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1-12 What was the amount of your company’s worldwide sales and revenues during 2019?
Your company’s worldwide net sales and revenues include sales by your foreign operations and subsidiaries as well as revenues from domestic operations. If your company is owned by a foreign parent, report sales to your parent and those affiliates not owned by your company. Include sales and operating revenues for discontinued operations. Exclude non-operating income such as dividends and interest (except for financial services companies where this is operating income) as well as excise, sales, and other revenue-based taxes collected from customers and passed along to government taxing agencies.
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1-13 How much of the amount reported in Question 1-12 was attributable to or originated from domestic operations?
“Domestic sales” does not mean sales to customers located in the United States. If your company is owned by a foreign parent, then sales to your parent and those affiliates not owned by your company are included.
Include:
• Sales and operating revenues to foreign customers, including foreign subsidiaries.
Licensing revenue, including software licensing, should be assigned to the country where the corresponding intellectual property is owned.
Example: U.S. Manufacturing Corporation sells parts to customers around the world. However, because all its operations are located inside the United States, it reports 100% of its sales in this question.
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1-14 How much of the 2019 sales and operating revenue amounts was for each business code listed or amended in Question 1-11: (1) Worldwide sales and operating revenues reported in Question 1-12
(2) Sales and operating revenues from domestic operations reported in Question 1-13
Transactions between one business code and another should be reported as would normally be reflected in segmental reporting. Use Line i to eliminate inter-company sales.
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Section 2: R&D Paid For by Your Company 2-1 What was the worldwide R&D expense (both direct and indirect) for your company in 2019?
Question 2-1 requests worldwide R&D expense. The reporting unit is your company, including all domestic and foreign subsidiaries that are more than 50% owned by your company for financial reporting purposes. All transactions between subdivisions within this reporting unit should be eliminated as inter-company transactions. Worldwide R&D expense also includes payments by your company for R&D services performed by (i) unrelated third parties, (ii) affiliates for which your company has less than a 50% ownership stake, and/or (iii) your foreign parent, if your company is foreign-owned.
R&D includes both direct costs such as salaries of researchers as well as administrative and overhead costs clearly associated with the company’s R&D.
Scenario 1: Your company is publicly traded. Report worldwide R&D expense as reported on SEC Form 10-K as defined in FASB ASC Topic 730, Research and Development.
Scenario 2: Your company is foreign-owned. Report the R&D expense figure of the U.S.-located company and domestic and foreign subsidiaries that are more than 50% owned by your U.S.- located company, if any. Do not include expenses by your foreign parent or by any foreign affiliate your U.S.-located company does not own. For reporting purposes, these entities should be treated the same as any unrelated third party such as a customer or supplier you do not own.
Scenario 3: Your company is privately owned. You should follow the same procedures as public companies when reporting R&D expense and follow the guidance in FASB ASC Topic 730, Research and Development. Privately held companies that cannot report on this basis should note reporting principles and difficulties in the space for "Remarks" at the end of the survey.
The following are examples of activities that typically would be excluded from research and development in accordance with FASB ASC Topic 730, Research and Development:
a. Engineering follow-through in an early phase of commercial production.
b. Quality control during commercial production including routine testing of products.
c. Trouble-shooting in connection with break-downs during commercial production.
d. Routine, on-going efforts to refine, enrich, or otherwise improve upon the qualities of an existing product.
e. Adaptation of an existing capability to a particular requirement or customer's need as part of a continuing commercial activity.
f. Seasonal or other periodic design changes to existing products.
g. Routine design of tools, jigs, molds, and dies.
h. Activity, including design and construction engineering, related to the construction, relocation, rearrangement, or start-up of facilities or equipment other than (1) pilot plants and (2) facilities or equipment whose sole use is for a particular research and development project.
i. Legal work in connection with patent applications or litigation, and the sale or licensing of patents.
Exclude from worldwide R&D expense:
Costs for R&D that were paid for by a third party such as R&D performed under contract.
For medical products companies, exclude costs for phase IV clinical trials since these trials take place after products have achieved technical and market feasibility.
Research and development activity in software: Does R&D include development of software and Internet applications?
Yes, as long as the research and development activities include an element of uncertainty, are intended to close knowledge gaps, and meet scientific and technological needs.
Report in this survey all software R&D as defined here regardless of the eventual user (internal or external).
R&D activity in software INCLUDES:
• Software development or improvement activities that expand scientific or technological knowledge
• Construction of new theories and algorithms in the field of computer science
R&D activity in software EXCLUDES:
• Software development that does not depend on a scientific or technological advance, such as:
o supporting or adapting existing systems
o adding functionality to existing application programs, and
o routine debugging of existing systems and software
• Creation of new software based on known methods and applications • Conversion or translation of existing software and software languages • Adaptation of a product to a specific client, unless knowledge that significantly
improved the base program was added in that process
For further guidance on accounting for software development costs see FASB Statement No. 86 (Accounting for the Costs of Computer Software to Be Sold, Leased); and FASB Interpretation No. 6 (Applicability of FASB Statement No. 2 to Computer Software).
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2-2 Does the amount reported in Question 2-1 include any of the following costs?
Although most companies share a general framework for R&D, we request that certain items be excluded for the sake of consistency. Certain costs and expenses are to be reported in Section 3 reflecting your company’s R&D activities that were paid for by others.
Question 2-2 asks whether the company’s R&D expense figure reported in Question 2-1 included costs for the following categories:
a. Collaborative R&D that was reimbursed by business partners, such as through cost-sharing agreements
• These agreements are very common in the biotechnology and pharmaceutical industries, but less so in other industries. These costs are requested in Section 3 of this survey.
b. R&D paid for by grants (government or private foundations)
• Examples include Small Business Innovation and Research (SBIR) grants, Department of Energy demonstration grants, and Gates Foundation research grants.
• These costs are requested in Section 3 of this survey.
c. R&D paid for by customers (customer-sponsored R&D)
• These costs are requested in Section 3 of this survey.
d. Technical services not an integral part of an R&D project (such as product support provided by R&D employees)
• This category most often applies to software and service companies where R&D staff also provides technical support and/or services to customers.
e. Bid and proposal costs
• This category represents the costs a company incurs applying to win a contract. Some government contractors group these costs with their R&D spending.
f. Expense your company claimed resulting from the acquisition of another company with unfinished R&D projects (in-process R&D).
g. Phase IV clinical trials.
• These clinical trials are conducted after a drug is marketed to assess its safety and efficacy.
Why is this important?
Not all companies treat the cost categories listed in this question consistently with respect to their inclusion or exclusion from R&D expense figures. This question allows the survey to measure and correct for these inconsistencies.
2-3 If you answered “Yes” to any of the costs in Question 2-2, what was the amount of these costs that was included in your response to Question 2-1?
Question 2-3 asks the company to estimate the amount of its R&D expense figure reported in Question 2-1 that was from the categories listed in Question 2-2.
Why is this important?
The six cost categories listed in Question 2-2 are not treated consistently by all companies with respect to their inclusion or exclusion from R&D expense figures. This question allows the survey to measure and correct these inconsistencies.
Although most companies share a general framework for R&D, we request that certain items be excluded for the sake of consistency. Certain costs and expenses are to be reported in Section 3 reflecting your company’s R&D activities that were paid for by others.
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2-4 Subtract Question 2-3 from Question 2-1 and enter the result here. This is the total R&D paid for by your company in 2019. Question 2-4 asks the company to subtract the amount reported in Question 2-3 from the amount reported in Question 2-1. The resulting figure is the starting point for the subsequent questions in Section 2. This survey refers to this amount as “total R&D paid for by your company”.
Information about R&D paid for by others such as customers or collaborators is collected in Section 3 of this survey
Why is this important?
The cost categories listed in Question 2-2 are not treated consistently by all companies with respect to their inclusion or exclusion from R&D expense figures. This question allows the survey to measure and correct for these inconsistencies.
2-5 How much of the amount reported in Question 2-4 was for R&D costs your company plans to recoup through indirect charges on U.S. federal government contracts (IR&D or independent R&D)?
Question 2-5 asks how much of the amount reported in Question 2-4 was a special category of R&D costs tracked by government contractors. In order to encourage business R&D in certain areas of interest to the government, federal agencies such as the Department of Defense allow companies to recoup certain R&D costs through indirect charges on government contracts. These R&D costs, called IR&D or independent R&D should only apply to Federal government contractors. IR&D costs should be reported only in this section of the survey, not in Section 3.
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R&D paid for by your company
2-6 Of the amount reported in Question 2-4, what were the costs for each business code listed or amended in Question 1-11 of this form?
If the company does not track its R&D costs by line of business or product line, it should make a reasonable estimate.
If the company has R&D that applies to more than one business code, such as basic or applied research conducted by a central R&D group, it should allocate this R&D to all applicable business codes on a reasonable basis. Examples of allocation methods include allocating in proportion to sales by business code and allocating in proportion to R&D employees working for each business code.
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2-7 Of the amount reported in Question 2-4, what costs were incurred by your company in the following locations?
This question requires the company to report where R&D costs were incurred, even in the case of purchased R&D services where the R&D may be performed in a different location.
This survey defines the domestic United States as the 50 states and the District of Columbia only. Costs incurred in Puerto Rico, Guam, and other U.S. territories should be reported in the category for “All other countries”.
Report R&D performed in domestic locations, including R&D that is paid for by foreign subsidiaries, in line a (Domestic U.S.).
Report R&D performed in foreign locations, including R&D performed by foreign subsidiaries that is paid for by domestic operations, in line b (All other countries).
Scenario: Your company has R&D operations in Washington state and in your subsidiary in Canada. All of the R&D costs (such as salaries of R&D employees) from the Washington R&D operations should be reported in the line for “Domestic U.S.” even if a portion of this R&D is for the benefit of your Canadian subsidiary.
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2-8 How much of the (1) domestic, (2) foreign, and (3) worldwide R&D paid for by your company in 2019 was for each of the following types of costs?
Question 2-8 asks the company to report its domestic, foreign, and worldwide R&D that it paid for in 2019 broken into the following categories:
a. Salaries, wages, and fringe benefits
• Include costs for all compensation and benefits of R&D employees and officers that are included in the R&D paid for by the company.
• Stock-based compensation should be reported in line b.
• Include payroll taxes such as Social Security and Medicare.
b. Stock-based compensation
• Include the cost of both stock options and stock grants.
c. Leased employees or temporary staffing, including on-site consultants, working on R&D
• Include costs paid to Professional Employer Organizations (PEOs), staffing agencies, and on-site consultants for personnel contributing to R&D.
d. Expensed equipment (not capitalized)
• Include all equipment purchases for R&D that are beneath the company’s capitalization threshold.
• Costs for materials and supplies consumed for R&D
f. Leased facilities and equipment
• Costs for leased facilities and equipment used in the company’s R&D
g. Depreciation and amortization on R&D property, plant, and equipment
• Include depreciation on tangible R&D assets such as buildings or equipment as well as the amortization of intangible assets such as patents and capitalized in-process R&D used only for the company’s R&D activities.
h. Royalties and licensing fees (including payments made to others for the use of patents and other forms of intellectual property used in your company’s R&D)
• Include payments made to others for patents and other intellectual property used in your company’s R&D activities.
i. Collaborative R&D payments (include joint development agreements)
• Include payments made to business partners for collaborative R&D, including milestone payments and payments made under cost-sharing agreements for joint R&D projects.
• Payments made to contract research organizations or other parties performing R&D under contract for the company should be reported in line j, “Contract R&D”.
j. Contract R&D (include payments to your company’s foreign parent for R&D)
• Include payments made to contract research organizations or other parties performing R&D under contract for the company.
k. Other purchased services
• Include payments for purchased services that support the company’s R&D, but are not themselves R&D.
• Examples of costs to report in this category include hazardous waste disposal services at the company’s R&D lab, payments to patients participating in clinical trials, and purchased computing time to run simulations for the company’s R&D.
l. All other costs (including administrative and overhead costs clearly associated with your company’s R&D)
• Include all other costs supporting the R&D the company paid for.
• Examples of costs to report in this category include: travel and training, journal subscriptions, information and telecommunications, utilities, and other administrative and overhead costs associated with R&D.
The domestic total should equal Question 2-7, line a, foreign total should equal Question 2-7, line b and worldwide should equal Question 2-4.
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2-9 Add Question 2-8, lines i and j for each column, and enter the result here. This is R&D performed by others.
Question 2-9 asks the company to add the amounts reported in Question 2-8, lines i and j for each column. This survey defines this amount as “R&D performed by others”.
Why is this important?
The costs reported in lines i and j of Question 2-8 represent payments to third parties (outsourcing) for R&D. Because the reporting company is not directly involved in the conduct of this R&D, it may not be able to provide the same amount of information on these costs as it could for the R&D it performs itself. This question allows the survey to address this limitation as well as address an interest in the nature of collaborative and contract R&D.
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2-10 Subtract Question 2-9 from Question 2-8, line m, for each column and enter the result here. This is R&D performed by your company. Question 2-10 asks the company to subtract the amounts reported in Question 2-9 from those reported in Question 2-8, line m for each column. This survey defines this amount as “R&D performed by your company”.
Why is this important?
The costs reported in lines i and j of Question 2-8 represent payments to third parties (outsourcing) for R&D. Because the reporting company is not directly involved in the conduct of this R&D, it may not be able to provide the same amount of information on these costs as it could for the R&D it performs itself. This question allows the survey to address this limitation as well as address an interest in the differences between R&D companies perform themselves versus R&D that is performed by collaborators and contractors.
2-11 Of the amount reported in Question 2-10, column 2, how much R&D was performed in the following locations?
Question 2-11 asks the company to report how much of the foreign R&D performed by the company in 2019 was performed in specific countries, including Puerto Rico.
Why is this important?
This information is needed in order to accurately measure the impact of globalization on R&D.
Countries and territories by region.
As defined by the Business Enterprise Research and Development Survey
Note: OWH = Other Western Hemisphere. ‘Latin America/OWH’ includes Bermuda and the geographical regions of the Caribbean, Central America, and South America.
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2-12 How much of the amount reported in Question 2-10, column 1, was performed in each state (including D.C.) in 2019?
If the company is unable to assign all its R&D costs to specific states, it should use a reasonable allocation method to report R&D by state. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
Why is this important?
This information is very important to policy makers who are interested in the geographic distribution of R&D activity and its role in regional economic development.
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2-13 At what domestic location did your company perform the largest dollar amount of R&D in 2019?
Question 2-13 asks the company to identify the location where the largest dollar value of the domestic R&D it performed in 2019 took place.
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2-14 How much of the amount reported in Question 2-10, column 1, was from the location identified in Question 2-13?
If the company is unable to allocate its R&D costs to a specific location, it should provide a reasonable estimate. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
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2-15 At what domestic location did your company perform the second largest dollar amount of R&D in 2019?
Question 2-15 asks the company to identify the location where the second largest dollar value of the domestic R&D it performed in 2019 took place.
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2-16 How much of the amount reported in Question 2-10, column 1, was from the location identified in Question 2-15?
If the company is unable to allocate its R&D costs to a specific location, it should provide a reasonable estimate. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
2-17 Of the domestic R&D performed by your company reported in Question 2-10, column 1, how much was for each business code reported in Question 2-6?
If the company does not track its R&D costs by line of business or product line, it should make a reasonable estimate.
If the company has R&D that applies to more than one business code, such as basic or applied research conducted by a central R&D group, it should allocate this R&D to all applicable business codes on a reasonable basis. Examples of allocation methods include allocating in proportion to sales by business code and allocating in proportion to R&D employees working for each business code.
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R&D transactions between legal entities under common ownership
Question 2-18 and Question 2-19 are intended only for companies that own more than 50 percent of any operations or subsidiaries located outside the 50 United States and D.C. during 2019 (that is, your company provided a “Yes” response to Question 1-5).
2-18 How much of the amount reported in Question 2-10, column 1, (domestic R&D performance) was paid for by your company’s foreign subsidiaries through inter-company transactions?
Example: Company Y owns a subsidiary in France. In order to complete the development of a product in 2019, the French subsidiary paid for R&D performed at Company Y’s U.S. R&D center. The cost of the U.S. R&D that was paid for by the French subsidiary would be included in this item.
Special Instruction for Foreign Owned Companies: Do not include payments from your company’s foreign parent. R&D costs associated with these payments should be reported in Section 3.
2-19 How much of the amount reported in Question 2-10, column 2, (foreign R&D performance) was paid for by your company’s domestic subsidiaries through inter-company transactions?
Example: Company Z owns a subsidiary in France. In order to complete the development of a product in 2019, the domestic operations paid for R&D performed at its subsidiary’s R&D center in France. The cost of the French subsidiary’s R&D that was paid for by the domestic operations would be included in this item.
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R&D performed by others
This survey defines this amount as “total R&D performed by others in 2019”. This amount represents the R&D that your company outsourced or paid to third parties during 2019.
2-20 How much of the amount reported in Question 2-9, column 1, was performed by the following types of organizations?
Question 2-20 asks the company to report how much of the domestic R&D paid for by your company in 2019 that was performed by eight specific types of organizations:
a. Companies located inside the United States (Include for-profit hospitals)
b. Your company’s foreign parent (if you are owned by a foreign parent)
c. Other companies located outside the United States
d. U.S. federal government agencies or laboratories
e. U.S. state and local government agencies or laboratories
f. Universities, colleges, and academic researchers (including principal investigators) located inside the United States
g. All other organizations inside the United States
h. All other organizations outside the United States
i. The total domestic R&D paid for by your company that was performed by others should equal the amount reported in Question 2-9, column 1.
2-21 In addition to the amount reported in Question 2-20, line f, did your company make monetary gifts to U.S. universities or colleges in 2019 that included support for R&D?
If you answer “Yes”, continue to Question 2-22. If you answer “No”, skip to Question 2-23.
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2-22 What was the amount of monetary gifts made by your company to U.S. universities or colleges in 2019 that was for R&D?
The intent of this question is to capture any financial support for academic R&D from companies that is not included in the paying company’s R&D expense.
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Projected R&D for 2020
2-23 What are your company’s projected 2020 costs for (1) domestic, (2) foreign, and (3) worldwide R&D paid for by your company?
Question 2-23 asks the company to project its domestic, foreign, and worldwide R&D costs for 2020.
NOTE: These amounts are the 2020 projections for the amounts reported in Question 2-8, line m.
2-24 How much of the amount reported in Question 2-23, column 1, is for projected purchased R&D services and projected payments to business partners for collaborative R&D?
Question 2-24 asks the company to project how much of the domestic R&D paid for by the company in 2020 will be for purchased R&D services and payments to business partners for collaborative R&D.
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Section 2 Worksheet Complete only if amount reported in Question 2-4 is less than $1 Million
1. Of the amount reported in Question 2-4, what costs were incurred by your company in the following locations?
This question requires the company to report where R&D costs were incurred, even in the case of
Include all other costs supporting the R&D the company paid for.
Examples of costs to report in this category include: materials and supplies, expensed equipment, depreciation, rent, travel and training, journal subscriptions, royalties or licenses paid for patents or software used in the company’s R&D, office, information and telecommunications, utilities, and other administrative and overhead costs associated with R&D.
purchased R&D services where the R&D may be performed in a different location.
This survey defines the domestic United States as the 50 states and the District of Columbia only. Costs incurred in Puerto Rico, Guam, and other U.S. territories should be reported in the category for “All other countries”.
Report R&D performed in domestic locations, including R&D that is paid for by foreign subsidiaries, in line a (Domestic U.S.).
Report R&D performed in foreign locations, including R&D performed by foreign subsidiaries that is paid for by domestic operations, in line b (All other countries).
Scenario: Your company has R&D operations in Washington state and in your subsidiary in Canada. All of the R&D costs (such as salaries of R&D employees) from the Washington R&D operations should be reported in the line for “Domestic U.S.” even if a portion of this R&D is for the benefit of your Canadian subsidiary.
2. How much of the amount reported in Question 1, line a, was for each of the following types of costs?
This question asks the company to report its domestic, foreign, and worldwide R&D that it paid for in 2019 broken into the following categories:
a. Salaries, wages, and fringe benefits
• Include costs for all compensation and benefits of R&D employees and officers that are included in the R&D paid for by the company.
• Include payroll taxes such as Social Security and Medicare.
b. Depreciation and amortization on R&D property, plant, equipment and intangible assets.
• Include depreciation on tangible R&D assets such as buildings or equipment as well as the amortization of intangible assets such as patents and capitalized in-process R&D used only for the company’s R&D activities.
c. Collaborative R&D payments (include joint development agreement)
• Include payments made to business partners for collaborative R&D, including milestone payments and payments made under cost-sharing agreements for joint R&D projects.
• Payments made to contract research organizations or other parties performing R&D under contract for the company should be reported in line d, “Contract R&D”.
d. Contract R&D (include payments to your company’s foreign parent for R&D)
• Include payments made to contract research organizations or other parties performing R&D under contract for the company.
e. All other costs (including administrative and overhead costs clearly associated with your company’s R&D)
• Include all other costs supporting the R&D the company paid for.
3. Add Question 2, lines a, b and e, and enter the result here. This is the domestic R&D paid for and performed by your company in 2019.
Why is this important?
The costs reported in lines c and d of Question 2 represent payments to third parties (outsourcing) for R&D. Because the reporting company is not directly involved in the conduct of this R&D, it may not be able to provide the same amount of information on these costs as it could for the R&D it performs itself. This question allows the survey to address this limitation as well as address an interest in the differences between R&D
companies perform themselves versus R&D that is performed by collaborators and contractors.
4. Of the domestic R&D paid for and performed by your company reported in Question 3, how much was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
For example, a project that aims to investigate the influence of different materials on fuel cell efficiency would be classified as basic research. A project that aims to improve fuel cell efficiency using new materials would be classified as applied research.
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Section 3: Costs paid for by others
3-1 What were your company’s worldwide costs (both direct and indirect) in 2019 for the following that were funded, paid for, or reimbursed by others not owned by your company?
Costs should be considered “funded, paid for, or reimbursed by others” if the company has been or expects to be paid for the costs by a customer, business partner, or grant-making organization. R&D includes both direct costs such as salaries of researchers as well as administrative and overhead costs clearly associated with the company’s R&D. Include in this question R&D costs reported as costs of goods or services sold in your company’s financial statements.
Note: Foreign-owned companies should report costs that are funded, paid for, or reimbursed by their foreign parent in this question.
Exclude payments in excess of the actual cost of the work performed (such as profits or fees). Also exclude costs that were reported in Question 2-4, as they should not be double counted in this question.
If your company administers a federally- funded research and development center (FFRDC) for an agency of the federal government, all FFRDC R&D costs should be excluded for reporting to this survey. For a complete list of FFRDCs, see https://www.nsf.gov/statistics/ffrdclist/
The categories in this question, listed below, define the survey term, “R&D paid for by others”:
a. R&D that was reimbursed by your company’s foreign parent (if you are owned by a foreign parent)
b. Collaborative R&D that was reimbursed by business partners, such as through cost-sharing agreements
• These agreements are very common in the biotechnology and pharmaceutical industries, but less so in other industries.
c. R&D paid for by grants (government or private foundations)
• Examples include Small Business Innovation and Research (SBIR) grants, Department of Energy demonstration grants, and Gates Foundation research grants.
d. Defense R&D goods or services provided as a prime or as a sub, to the government and/or government contractors
• Include defense R&D performed as a prime contractor and/or as a subcontractor. • This category most often applies to defense contractors and subcontractors performing
tasks such as designing, building, and testing prototypes of new military weapon systems and developing custom software for defense applications.
• Include all defense R&D funded by the Department of Defense (DOD), the Department of Energy’s weapons programs, the Department of Homeland Security, and other Federal agencies.
• R&D funds from DOD include costs for research, development, test, and evaluation activities that are funded through DOD’s 6-1 through 6-6 budget appropriations.
• Exclude costs for activities that funded through DOD’s 6-7 budget appropriations, Operational Systems Development.
• Exclude costs for non-experimental work on projects that have achieved technical feasibility, such as low-rate initial production.
e. Medical clinical trial Phase I-III services provided to others not owned by your company (include pass-through costs)
• This category involves the testing of potential medical products in human subjects.
Phase I – III clinical trials must be successfully completed in order for a product to be approved for use in the general population.
• Include pass-through/out-of-pocket costs paid to investigators and patients participating in clinical trials.
• Exclude costs for Phase IV clinical trials because these trials take place after a product has been approved for sale.
• Offices of physicians, dentists, and other health practitioners with employees acting as investigators for clinical trials generally should report 0 (zero) to this item. These companies should only report compensation for sponsored studies if the investigators’ role in the study extends beyond monitoring his/her own patients to the development and management of overall study protocols.
f. Medical R&D services, other than clinical trials, provided to others not owned by your company
• Nonclinical (also known as preclinical) research and development involves research on potential medical products that does not involve human subjects. This R&D consists of both in vitro studies as well as studies using animal subjects.
g. Nondefense custom software development and/or computer systems designed for others not owned by your company
• See definitions in “Research and development activity in software” under guidance for Question 2-1.
• This category includes the development of new or significantly improved software, both as an end product and for use embedded in other products.
• Exclude: Software development that does not depend on a scientific or technological advance, such as adding functionality to existing application programs, debugging systems, and adapting existing software.
• Software development for defense-related applications should be reported in line d.
h. Prototype development, production, and testing for customer’s products prior to their introduction to the market (excluding defense-related prototyping reported in line d)
• Exclude quality control testing and other testing services for products already on the market. All other R&D services provided to the Federal Government or to others not owned by your company.
i. All other R&D services provided to the Federal Government or to others not owned by your company.
3-2 Of the amount reported in Question 3-1, line j, what costs were incurred by your company in the following locations?
This question requires the company to report where R&D costs were incurred, even in the case of purchased R&D services where the R&D may be performed in a different location.
This survey defines the domestic United States as the 50 states and the District of Columbia only. Costs incurred in Puerto Rico, Guam, and other U.S. territories should be reported in the category for “All other countries”.
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3-3 How much of the (1) domestic, (2) foreign, and (3) worldwide R&D paid for by others in 2019 was for each of the following types of costs?
Question 3-3 asks the company to report its domestic, foreign, and worldwide R&D paid for by others in 2019 in the following categories:
a. Salaries, wages, and fringe benefits
• Include costs for all compensation and benefits of R&D employees and officers that are included in the R&D paid for by the company.
• Stock-based compensation should be reported in line b.
• Include payroll taxes such as Social Security and Medicare.
b. Stock-based compensation
• Include the cost of both stock options and stock grants.
c. Leased employees or temporary staffing, including on-site consultants, working on R&D
• Include costs paid to Professional Employer Organizations (PEOs), staffing agencies, and on-site consultants for personnel contributing to R&D.
• Include all equipment purchases for R&D that are beneath the company’s capitalization threshold.
e. Materials and supplies
• Costs for materials and supplies consumed for R&D
f. Leased facilities and equipment
• Costs for leased facilities and equipment used in the company’s R&D
g. Depreciation and amortization on R&D property, plant, and equipment
• Include depreciation on tangible R&D assets such as buildings or equipment as well as the amortization of intangible assets such as patents and capitalized in-process R&D used only for the company’s R&D activities.
h. Royalties and licensing fees (including payments made to others for the use of patents and other forms of intellectual property used in your company’s R&D)
• Include payments made to others for patents and other intellectual property used in your company’s R&D activities.
i. Payments to business partners for collaborative R&D (exclude royalties and licensing fees)
• Include payments made to business partners for collaborative R&D, including milestone payments and payments made under cost-sharing agreements for joint R&D projects.
• Payments made to contract research organizations or other parties performing R&D under contract for the company should be reported in line j, “Purchased R&D services”.
j. Contract R&D (include payments to your company's foreign parent for R&D)
• Include payments made to contract research organizations or other parties performing R&D under contract for the company.
k. All other purchased services except R&D
• Include payments for purchased services that support the company’s R&D, but are not themselves R&D.
• Examples of costs to report in this category include hazardous waste disposal services at the company’s R&D lab, payments to patients participating in clinical trials, and purchased computing time to run simulations for the company’s R&D.
• If your company is a contract research organization managing clinical trials, include compensation of medical professionals, investigators, and human subjects participating in clinical trials or reimbursement of out-of-pocket costs in this category.
l. All other costs (including administrative and overhead costs clearly associated with your company’s R&D)
• Include all other costs supporting the R&D the company paid for.
• Examples of costs to report in this category include: travel and training, journal subscriptions, information and telecommunications, utilities, and other administrative and overhead costs associated with R&D.
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3-4 Add Question 3-3, line i and j for each column, and enter the result here. This is R&D performed by others (e.g., subcontracted/passed-through R&D costs).
Question 3-4 asks the company to add the amounts reported in Question 3-3, lines i and j for each column. This survey defines this amount as “R&D performed by others”.
Why is this important?
The costs reported in lines i and j of Question 3-3 represent payments to third parties for R&D. Because the reporting company is not directly involved in the conduct of this R&D, it may not be able to provide the same amount of information on these costs as it could for the R&D it performs itself. This question allows the survey to address this limitation as well as address an interest in the nature of collaborative and contract R&D.
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3-5 Subtract Question 3-4 from Question 3-3, line m, for each column and enter the result here. This is R&D performed by your company that was paid for by others.
Question 3-5 asks the company to subtract the amounts reported in Question 3-4 from those reported in Question 3-3, line m for each column. This survey defines this amount as “R&D performed by your company that was paid for by others”.
The costs reported in line l of Question 3-3 represent payments by third parties for R&D. Because the reporting company is directly involved in the conduct of this R&D, it may be able to provide accurate information on these costs.
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3-6 Of the amount reported in Question 3-5, column 2, how much R&D was performed in the following locations?
Question 3-6 asks the company to report how much of the foreign R&D performed by the company that was paid for by others was performed in specific countries, including Puerto Rico.
Why is this important?
This information is needed in order to accurately measure the impact of globalization on R&D.
Countries and territories by region
As defined by the Business Enterprise Research and Development Survey
Puerto Rico (U.S.) Not assigned to a region in this survey.
Qatar Middle East
Romania Europe
Russia Europe
Rwanda Africa
Saint Kitts and Nevis Latin America/OWH
Saint Lucia Latin America/OWH
Saint Vincent and the Grenadines Latin America/OWH
Samoa Asia and Pacific
San Marino Europe
Sao Tome and Principe Africa
Saudi Arabia Middle East
Senegal Africa
Serbia Europe
Seychelles Africa
Sierra Leone Africa
Singapore Asia and Pacific
Slovakia Europe
Slovenia Europe
Solomon Islands Asia and Pacific
Somalia Africa
South Africa Africa
South Korea Asia and Pacific
South Sudan Africa
Spain Europe
Sri Lanka Asia and Pacific
Sudan Africa
Suriname Latin America/OWH
Swaziland Africa
Sweden Europe
Switzerland Europe
Syria Middle East
Taiwan Asia and Pacific
Tajikistan Asia and Pacific
Tanzania Africa
Thailand Asia and Pacific
Timor-Leste Asia and Pacific
Togo Africa
Tonga Asia and Pacific
Trinidad and Tobago Latin America/OWH
Tunisia Africa
Turkey Europe
Turkmenistan Asia and Pacific
Turks and Caicos Islands (U.K.) Latin America/OWH
Tuvalu Asia and Pacific
Uganda Africa
Ukraine Europe
United Arab Emirates Middle East
United Kingdom Europe
Uruguay Latin America/OWH
Uzbekistan Asia and Pacific
Vanuatu Asia and Pacific
Venezuela Latin America/OWH
Vietnam Asia and Pacific
Virgin Islands (U.K.) Latin America/OWH
Virgin Islands (U.S.) Latin America/OWH
Yemen Middle East
Zambia Africa
Zimbabwe Africa
Note: OWH = Other Western Hemisphere. ‘Latin America/OWH’ includes Bermuda and the geographical regions of the Caribbean, Central America, and South America.
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3-7 How much of the domestic R&D performed by your company that was paid for by others reported in Question 3-5, column 1, was for each business code listed or amended in Question 1-11 of this form?
If the company does not track its R&D costs by line of business or product line, it should make a reasonable estimate.
If the company has R&D that applies to more than one business code, such as basic or applied research conducted by a central R&D group, it should allocate this R&D to all
applicable business codes on a reasonable basis. Examples of allocation methods include allocating in proportion to sales by business code and allocating in proportion to R&D employees working for each business code.
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3-8 How much of the amount reported in Question 3-5, column 1, was paid for by each of the following?
Question 3-8 asks the company to report how much of the domestic R&D performed by your company in 2019 that was paid for by others was paid for by eight specific types of organizations:
Example: Company Sub Inc. performs custom software development for a large defense company as a subcontractor on a contract with the U.S. Dept. of Defense. Even though Sub Inc. is working directly for the defense company, it reports the cost of this development in line d, because the Dept. of Defense was the original source of funds.
a. Other companies located inside the United States (Include for-profit hospitals)
b. Your company’s foreign parent (if you are owned by a foreign parent)
c. Other companies located outside the United States
d. U.S. federal government agencies or laboratories
e. U.S. state government agencies or laboratories
f. Foreign government agencies or laboratories
g. Universities, colleges, and academic researchers (including principal investigators) located inside the United States
h. Universities and colleges located outside the United States
i. All other organizations inside the United States
j. All other organizations outside the United States
3-9 Add Question 3-8 lines a, b, and c, and enter the result here. This is the domestic R&D performed by your company that was paid for by other companies.
Question 3-9 asks the company to enter the sum of Question 3-8, lines a, b, and c. This survey defines this amount as “R&D that was paid for by other companies”.
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3-10 Using the list of business codes printed below, allocate the amount reported in Question 3-9 based on the industries of the companies that paid for the R&D. As needed, enter additional codes from this list in the spaces provided.
These business codes should represent the industry of the company that is funding the R&D.
For example, if Company A specializes in R&D services in biotechnology (business code 54173) and is performing research and development for Company B, a pharmaceutical company (business code 32541), Company B’s business code (32541) should be listed here.
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3-11 How much of the amount reported in Question 3-8, line d, was paid for by the following agencies
Question 3-11 asks the company to report the amount of R&D it performed in the domestic U.S. that was paid for by specific federal government agencies.
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3-12 How much of the amount reported in Question 3-8, line d, was performed under the following types of agreements?
a. Contracts (include direct or prime contracts and subcontracts)
b. Grants, reimbursements, and all other agreements
Question 3-12 asks the company to identify the amounts by type of agreements used for the company’s domestic R&D paid for by the U.S. federal government.
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3-13 Subtract Question 3-8, line d, from Question 3-8, line k, and enter the result here. This is the domestic R&D performed by your company that was paid for by nonfederal sources.
Question 3-13 asks the company to subtract the amount reported in Question 3-7 from that reported in Question 3-5. This survey defines this amount as “domestic R&D performed by your company that was paid for by nonfederal sources”.
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3-14 How much of the following three amounts was performed in each state (including D.C.):
1) Domestic R&D paid for by the U.S. federal government reported in Question 3-8
2) Domestic R&D paid for by nonfederal sources reported in Question 3-13
3) Total domestic R&D performed by your company that was paid for by others reported in Question 3-5, column 1
Question 3-14 asks the company to report how much of the domestic R&D it performed that was paid for by others was performed in each state (including D.C.) in 2019. The question asks the company to report how much of the R&D in each state was paid for
by the U.S. federal government as opposed to all other sources. If the company is unable to assign all its R&D costs to specific states, it should use a reasonable allocation method to report R&D by state.
Companies should note their allocation method in the space for "Remarks" at the end of the survey.
Why is this important?
This information is very important to policy makers who are interested in the geographic distribution of R&D activity and its role in regional economic development.
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3-15 At what domestic location did your company perform the largest dollar amount of R&D that was paid for by others in 2019?
Question 3-15 asks the company to identify the location where the largest dollar value of the domestic R&D it performed that was paid for by others in 2019 took place.
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3-16 How much of the amount reported in Question 3-5, column 1, was from the location identified in Question 3-15?
If the company is unable to allocate its R&D costs to a specific location, it should provide a reasonable estimate. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
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3-17 At what domestic location did your company perform the second largest dollar amount of R&D that was paid for by others in 2019?
Question 3-17 asks the company to identify the location where the second largest dollar value of the domestic R&D it performed that was paid for by others in 2019 took place.
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3-18 How much of the amount reported in Question 3-5, column 1, was from the location identified in Question 3-17?
If the company is unable to allocate its R&D costs to a specific location, it should provide a reasonable estimate. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
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R&D performed by others
3-19 Of the domestic R&D performed by others reported in Question 3-4, column 1, how much was paid for by U.S. Federal government agencies or laboratories?
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Projected R&D paid for by others in 2020
3-20 What are your company’s projected 2020 costs for R&D that will be paid for by others?
Question 3-20 asks the company to project its 2020 costs for R&D that will be paid for by others.
Note: This amount is the 2020 projection for what is reported in Question 3-1, line j.
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3-21 How much of the projected costs in 2020 for R&D that will be paid for by others reported in Question 3-20 will be performed by your company in the United States?
Question 3-21 asks the company to project its 2020 costs for R&D it will perform in the domestic U.S. that will be paid for by others.
Note: This amount is the 2020 projection for what is reported in Question 3-5, column 1.
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3-22 How much of the projected costs in 2020 for domestic R&D performed by your company that will be paid for by others reported in Question 3-21 will be paid for by the U.S. federal government?
Question 3-22 asks the company to project its 2020 costs for R&D it will perform in the domestic U.S. that will be paid for by the U.S. federal government.
Note: This amount is the 2020 projection for what is reported in Question 3-8, line d.
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Section 3 Worksheet
Complete only if amount reported in Question 3-1, line j is less than $1 Million
1. Of the amount reported in Question 3-1, line j, what costs were incurred by your company in the following locations?
This question requires the company to report where R&D costs were incurred, even in the case of purchased R&D services where the R&D may be performed in a different location.
This survey defines the domestic United States as the 50 states and the District of Columbia only. Costs incurred in Puerto Rico, Guam, and other U.S. territories should be reported in the category for “All other countries”.
Report R&D performed in domestic locations, including R&D that is paid for by foreign subsidiaries, in line a (Domestic U.S.).
Report R&D performed in foreign locations, including R&D performed by foreign subsidiaries that is paid for by domestic operations, in line b (All other countries).
Scenario: Your company has R&D operations in Washington state and in your subsidiary in Canada. All of the R&D costs (such as salaries of R&D employees) from the Washington R&D operations should be reported in the line for “Domestic U.S.”
2. How much of the amount reported in Question 1, line a, was for each of the following types of costs?
This question asks the company to report its domestic, foreign, and worldwide R&D that it paid for in 2019 broken into the following categories:
a. Salaries, wages, and fringe benefits
• Include costs for all compensation and benefits of R&D employees and officers that are included in the R&D paid for by the company.
• Include payroll taxes such as Social Security and Medicare.
b. Depreciation and amortization on R&D property, plant, equipment, and intangible assets.
• Include depreciation on tangible R&D assets such as buildings or equipment as well as the amortization of intangible assets such as patents and capitalized in-process R&D used only for the company's R&D activities.
c. Collaborative R&D payments (include joint development agreement)
• Include payments made to business partners for collaborative R&D, including milestone payments and payments made under cost-sharing agreements for joint R&D projects.
• Payments made to contract research organizations or other parties performing R&D under contract for the company should reported in line d, "Contract R&D".
d. Contract R&D (include payments to your company's foreign parent for R&D)
• Include payments made to contract research organizations or other parties performing R&D under contract for the company.
e. All other costs (including administrative and overhead costs clearly associated with your company's R&D)
• Include all other costs supporting the R&D the company paid for.
3. Add Question 2, lines a, b and e, and enter the result here. This is the domestic R&D paid for and performed by your company that was paid for by others in 2019.
Why is this important?
The costs reported in lines c and d of Question 2 represent payments to third parties (outsourcing) for R&D. Because the reporting company is not directly involved in the conduct of this R&D, it may not be able to provide the same amount of information on these costs as it could for the R&D it performs itself. This question allows the survey to address this limitation as well as address an interest in the differences between R&D companies perform themselves versus R&D that is performed by collaborators and contractors.
4. Of the domestic R&D performed by your company that was paid for by others reported in Question 3, how much was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
For example, a project that aims to investigate the influence of different materials on fuel cell efficiency would be classified as basic research. A project that aims to improve fuel cell efficiency using new materials would be classified as applied research.
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Section 4: Capital Expenditures
4-1 What was the amount of your company’s capital expenditures in the domestic United States in 2019?
Exclude: Assets acquired through merger and acquisition activities.
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4-2 How much of the amount reported in Question 4-1 was for R&D operations?
Companies should allocate capital expenditures that benefit both R&D operations and other company operations on a reasonable basis. Companies should note their allocation method in the space for "Remarks" at the end of the survey.
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4-3 How much of the amount reported in Question 4-2 was for the following?
Question 4-3 asks the company to report how much of the domestic capital expenditures for R&D operations may be classified in four types of capital expenditures:
a. Land acquisition
• Include the costs of purchased or improved buildings and other facilities such as signal towers or windmills that are fixed to the land.
e. All other capital expenditures for R&D operations
The total domestic capital expenditures for R&D should equal what was reported in Question 4-2
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4-4 Was any of the amount reported in Question 4-2 funded, paid for, or reimbursed by others not owned by your company (including your foreign parent)?
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Section 5: Management and Strategy of R&D
5-1 What percentage of the total R&D paid for by your company reported in Question 2-4 was directed toward business areas or product lines that are new to your company?
Question 5-1 asks what percent of the R&D the company paid for in 2019 was aimed at expanding the company’s areas of business or product lines outside of its existing areas of expertise. The characteristics that define a business area or product line as “new” may differ from company to company and industry to industry, but they generally involve technologies and customers that are new to the company.
Example: Company A manufactures laptop computers. In 2019, Company A’s management decided to attempt to enter the cellular phone market and used a portion of the company’s R&D budget to develop cellular phones. Because this was a new line of business in 2019, Company A reports this R&D in this question.
The following are examples of R&D projects that would be reported in this question:
• A pharmaceutical company that specializes in anti-viral medications invests in a research project to develop a cancer treatment.
• A computer manufacturer invests in a project to develop a smart phone.
• A software company that specializes in anti-virus software invests in an R&D project to develop office productivity software.
• A semiconductor company that specializes in central processing units for computers invests in an R&D project to develop graphics processors.
• A manufacturer and distributor of beer invests in an R&D project to develop an energy drink.
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Characteristics of domestic R&D paid for and performed by your company
5-2 Copy the amount from Question 2-10, column 1. This is the domestic R&D paid for and performed by your company.
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5-3 How much of the amount reported in Question 5-2 was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective. It is the planned, systematic pursuit of new knowledge or understanding.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
5-4 If you reported any research in Question 5-3, line a, how much of that research was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Applied research has the goal of solving a specific problem or meeting a specific commercial objective. Basic research has the goal of acquiring new knowledge or understanding of a given topic without a specific commercial application in mind.
For example, a project that aims to investigate the influence of different materials on fuel cell efficiency would be classified as basic research. A project that aims to improve fuel cell efficiency using new materials would be classified as applied research.
Areas of application for domestic R&D paid for and performed by your company
NOTE: You may report the same R&D in multiple areas for Questions 5-5 to 5-9.
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5-5 What percentage of the amount reported in Question 5-2 had energy applications, including energy production, distribution, storage, and efficiency (excluding exploration and prospecting)?
The intent of this question is to measure the amount of R&D companies are investing in energy- related applications.
Only include costs for R&D projects where energy was an intended area of application from its inception. Do not include costs for R&D projects where energy was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with energy applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-5 through 5-9 could sum to more than 100%.
Example: Company B is a semiconductor manufacturer. Its products are not designed specifically for energy applications. In 2019, 10% of the domestic R&D performed by the company was focused on improving the energy efficiency of its products. Based on this, Company B reports “10%” for this question.
5-6 What percentage of the amount reported in Question 5-2 had environmental protection applications, including pollution abatement?
The intent of this question is to measure the amounts of R&D companies are investing in environmental protection applications.
Only include costs for R&D projects where environmental protection was an intended area of application from its inception. Do not include costs for R&D projects where environmental protection was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with environmental protection applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-5 through 5-9 could sum to more than 100%.
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5-7 What percentage of the amount reported in Question 5-2 had defense applications, including military applications and homeland security-related R&D?
The intent of this question is to measure the amount of R&D companies are investing in defense applications.
Defense applications include military applications and other national security applications. Exclude R&D for computer security applications such as anti-virus software unless it is intended for military/national security use.
Only include costs for R&D projects where defense was an intended area of application from its inception. Do not include costs for R&D projects where defense was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with defense applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-5 through 5-9 could sum to more than 100%.
5-8 What percentage of the amount reported in Question 5-2 had health or medical applications?
The intent of this question is to measure the amount of R&D companies are investing in health-related applications.
Only include costs for R&D projects where health was an intended area of application from its inception. Do not include costs for R&D projects where health was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with health/medical applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-5 through 5-9 could sum to more than 100%.
Note: Include clinical trials.
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5-9 What percentage of the amount reported in Question 5-2 had agricultural applications?
The intent of this question is to measure the amount of R&D companies are investing in agricultural-related applications.
This includes R&D into new and significantly improved fertilizers, pesticides, farm equipment, and crop management techniques.
Only include costs for R&D projects where agriculture was an intended area of application from its inception. Do not include costs for R&D projects where agriculture was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with agricultural applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-5 through 5-9 could sum to more than 100%.
Technology focus of domestic R&D paid for and performed by your company
NOTE: You may report the same R&D in multiple areas for Question 5-10 to 5-13.
5-10 What percentage of the amount reported in Question 5-2 was for software products or software embedded in other projects or products?
See definitions in “Research and development activity in software” under guidance for Question 2-1. Include R&D in software for both packaged software that is sold/licensed to consumers as well as R&D in software for internet applications that generate revenue. This includes R&D in software developed specifically for an R&D project that has no alternative future use as well as R&D in software that is developed to be installed or run in other products sold by the company.
Include the total cost of an R&D project with software applications in the calculation for this question, even if the project has other applications. This means that the percentages reported in Question 5-10 through 5-13 could sum to more than 100%.
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5-11 What percentage of the amount reported in Question 5-2 was for biotechnology?
Biotechnology is the application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services.
The following list provides examples of biotechnology techniques and applications. The list is not intended to be exhaustive, but it is indicative of the types of activities included in the definition of biotechnology.
• DNA/RNA: Genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology, large-scale DNA synthesis, genome- and gene-editing, gene drive.
• Proteins and other molecules: Sequencing/synthesis/engineering of proteins and peptides (including large molecule hormones); improved delivery methods for large molecule drugs; proteomics, protein isolation and purification, signaling, identification of cell receptors.
• Cell and tissue culture and engineering: Cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation, marker assisted breeding technologies, metabolic engineering.
• Process biotechnology techniques: Fermentation using bioreactors, biorefining, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biosensing, biofiltration and phytoremediation, molecular aquaculture.
• Gene and RNA vectors: Gene therapy, viral vectors.
• Bioinformatics: Construction of databases on genomes, protein sequences; modeling complex biological processes, including systems biology.
• Nanobiotechnology: Applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics, etc.
Include the total cost of an R&D project with biotechnology applications in the calculation for this question, even if the project has other applications. This means that the percentages reported in Questions 5-10 through 5-13 could sum to more than 100%.
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5-12 What percentage of the amount reported in Question 5-2 was for nanotechnology?
Nanotechnology is defined as the understanding of processes and phenomena and the application of science and technology to organisms, organic and inorganic materials, as well as parts, products and models thereof, at the nanometer-scale (but not exclusively below 100 nanometers) in one or more dimensions, where the onset of size-dependent phenomena usually enables novel applications. These applications utilize the properties of nanoscale materials that differ from the properties of individual atoms, molecules, and bulk matter for the production of knowledge, goods and services, like improved materials, devices, and systems that exploit these new properties.
Many technologies related to conventional solid-state semiconductor manufacturing are capable of creating features smaller than 100 nanometers, so R&D involving these technologies should be included in this question.
The following list provides examples of nanotechnology techniques and applications. The list is not intended to be exhaustive, but it is indicative of the types of activities included in the definition of nanotechnology.
• Nanomaterial: material with any external dimension in the nanoscale or having internal structure or surface structure in the nanoscale
• Nanoelectronics: field of science and technology concerned with the development and production of functional electronic devices with nanoscale components.
• Nanophotonics: branch of photonics concerned with interaction of photons with nanomaterials aiming to design optical or optoelectronic components.
• Nanomedicine: medical application of nanotechnology (e.g. medical applications of nanomaterials and biological devices, to nanoelectronic biosensors, and even possible future applications of molecular nanotechnology such as biological machines).
• Nanomagnetics: the study of the magnetic response of nanomaterials to an applied magnetic field, and their applications.
• Nanomechanics: a branch of nanoscience studying fundamental mechanical (elastic, thermal and kinetic) properties of physical systems at the nanometer scale.
• Nanofiltration: a membrane filtration process used for the softening of water and the removal of organic matter; includes nano-membranes.
• Nanotools: multi-component tools and devices used for manipulation, nanolithography and nanofabrication.
• Nanoinstruments or –devices: multi-component instruments or devices used for observation, analysis or control of matter at the nanometer scale.
• Nanomanufacturing: intentional synthesis, generation or control of nanomaterials, or fabrication steps in the nanoscale, for commercial purposes.
• Nanobiotechnology: application of nanoscience or nanotechnology to biology or biotechnology. This includes the application of nanotechnology to human health and veterinary science.
• Bionanotechnology: application of biology to nanotechnology, i.e. the use of biological molecules in nanomaterials, nanoscale devices or nanoscale systems.
• Catalysis: the study and application of catalytic process that are based on nanotechnology-enabled components.
• Software for modelling and simulation: the development and application of software for the modelling and simulation of nanoscale phenomena (i.e. phenomena occurring at a length scale between 1 nm and 100 nm).
Include the total cost of an R&D project with nanotechnology applications in the calculation for this question, even if the project has other applications. This means that the percentages reported in Questions 5-10 through 5-13 could sum to more than 100%.
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5-13 What percentage of the amount reported in Question 5-2 was for artificial intelligence (AI)?
Artificial Intelligence (AI) – A branch of computer science and engineering devoted to making machines intelligent. Intelligence is that quality that enables an entity to perceive, analyze, determine response and act appropriately in its environment.
Systems with artificial intelligence perform functions including, but not limited to, speech recognition, machine vision, or machine learning:
• Speech recognition transforms human speech into a format useful for computer applications (for example, a digital assistant)
• Machine vision uses sensors and software that allow images to be used as an input for computer applications (for example, systems that sort or inspect objects or support navigation in mobile equipment)
• Machine learning uses statistical software and data to “learn” and make better predictions without reprogramming (for example, recommender systems for websites, or sales and demand forecasting)
Artificial Intelligence technologies also include virtual agents, deep learning platforms, decision management systems, biometrics, text analytics, and natural language generation and processing.
Include the total cost of an R&D project for AI in the calculation for this question, even if the project has other applications. This means that the percentages reported in Questions 5-10 through 5-13 could sum to more than 100%.
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Characteristics of foreign R&D paid for and performed by your company
5-14 Copy the amount from Question 2-10, column 2. This is the foreign R&D paid for and performed by your company.
5-15 How much of the foreign R&D paid for and performed by your company reported in Question 5-14 was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
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Domestic R&D performed by your company that was paid for by others
5-16 Copy the amount from Question 3-5, column 1. This is the domestic R&D performed by your company that was paid for by others.
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5-17 How much of the amount reported in Question 5-16 was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products
5-18 If you reported any research in Question 5-17, line a, how much of that research was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Applied research has the goal of solving a specific problem or meeting a specific commercial objective. Basic research has the goal of acquiring new knowledge or understanding of a given topic without a specific commercial application in mind.
NOTE: You may report the same R&D in multiple areas for Questions 5-19 to 5-23.
Include the total cost of an R&D project with energy applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 through 5-23 could sum to more than 100%.
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5-19 What percentage of the amount reported in Question 5-16 had energy applications, including energy production, distribution, storage, and efficiency (excluding exploration and prospecting)?
The intent of this question is to measure the amount of R&D companies are investing in energy- related applications.
Only include costs for R&D projects where energy was an intended area of application from its inception. Do not include costs for R&D projects where energy was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with energy applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 to 5-23 could sum to more than 100%.
5-20 What percentage of the amount reported in Question 5-16 had environmental protection applications, including pollution abatement?
The intent of this question is to measure the amounts of R&D companies are investing in environmental protection applications.
Only include costs for R&D projects where environmental protection was an intended area of application from its inception. Do not include costs for R&D projects where environmental protection was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with environmental protection applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 to 5-23 could sum to more than 100%.
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5-21 What percentage of the amount reported in Question 5-16 had defense applications, including military applications and homeland security-related R&D?
The intent of this question is to measure the amount of R&D companies are investing in defense applications.
Defense applications include military applications and other national security applications. Exclude R&D for computer security applications such as anti-virus software unless it is intended for military/national security use.
Only include costs for R&D projects where defense was an intended area of application from its inception. Do not include costs for R&D projects where defense was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with defense applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 to 5-23 could sum to more than 100%.
5-22 What percentage of the amount reported in Question 5-16 had health or medical applications?
The intent of this question is to measure the amount of R&D companies are investing in health- related applications.
Only include costs for R&D projects where health was an intended area of application from its inception. Do not include costs for R&D projects where health was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with health/medical applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 to 5-23 could sum to more than 100%.
Note: Include clinical trials.
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5-23 What percentage of the amount reported in Question 5-16 had agricultural applications?
The intent of this question is to measure the amount of R&D companies are investing in agricultural-related applications.
This includes R&D into new and significantly improved fertilizers, pesticides, farm equipment, and crop management techniques.
Only include costs for R&D projects where agriculture was an intended area of application from its inception. Do not include costs for R&D projects where agriculture was not an intended area of application until after the project was completed.
Include the total cost of an R&D project with agricultural applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-19 to 5-23 could sum to more than 100%.
Technology focus of domestic R&D performed by your company that was paid for by others
NOTE: You may report the same R&D in multiple areas for Questions 5-24 to 5-27.
5-24 What percentage of the amount reported in Question 5-16 was for software products or software embedded in other projects or products?
See definitions in “Research and development activity in software” under guidance for Question 2-1. Include R&D in software for both packaged software that is sold/licensed to consumers as well as R&D in software for internet applications that generate revenue. This includes R&D in software developed specifically for an R&D project that has no alternative future use as well as R&D in software that is developed to be installed or run in other products sold by the company.
Include the total cost of an R&D project with software applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-24 through 5-27 could sum to more than 100%.
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5-25 What percentage of the amount reported in Question 5-16 was for biotechnology?
Biotechnology is the application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services.
The following list provides examples of biotechnology techniques and applications. The list is not intended to be exhaustive, but it is indicative of the types of activities included in the definition of biotechnology.
• DNA/RNA: Genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology, large-scale DNA synthesis, genome- and gene-editing, gene drive.
• Proteins and other molecules: Sequencing/synthesis/engineering of proteins and peptides (including large molecule hormones); improved delivery methods
for large molecule drugs; proteomics, protein isolation and purification, signaling, identification of cell receptors.
• Cell and tissue culture and engineering: Cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation, marker assisted breeding technologies, metabolic engineering.
• Process biotechnology techniques: Fermentation using bioreactors, biorefining, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biosensing, biofiltration and phytoremediation, molecular aquaculture.
• Gene and RNA vectors: Gene therapy, viral vectors.
• Bioinformatics: Construction of databases on genomes, protein sequences; modeling complex biological processes, including systems biology.
• Nanobiotechnology: Applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics, etc.
Include the total cost of an R&D project with biotechnology applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-24 through 5-27 could sum to more than 100%.
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5-26 What percentage of the amount reported in Question 5-16 was for nanotechnology?
Nanotechnology is defined as the understanding of processes and phenomena and the application of science and technology to organisms, organic and inorganic materials, as well as parts, products and models thereof, at the nanometer-scale (but not exclusively below 100 nanometers) in one or more dimensions, where the onset of size-dependent phenomena usually enables novel applications. These applications utilize the properties of nanoscale materials that differ from the properties of individual atoms, molecules, and bulk matter for the production of knowledge, goods and services, like improved materials, devices, and systems that exploit these new properties.
Many technologies related to conventional solid-state semiconductor manufacturing are capable of creating features smaller than 100 nanometers, so R&D involving these technologies should be included in this question.
The following list provides examples of nanotechnology techniques and applications. The list is not intended to be exhaustive, but it is indicative of the types of activities included in the definition of nanotechnology.
• Nanomaterial: material with any external dimension in the nanoscale or having internal structure or surface structure in the nanoscale
• Nanoelectronics: field of science and technology concerned with the development and production of functional electronic devices with nanoscale components.
• Nanophotonics: branch of photonics concerned with interaction of photons with nanomaterials aiming to design optical or optoelectronic components.
• Nanomedicine: medical application of nanotechnology (e.g. medical applications of nanomaterials and biological devices, to nanoelectronic biosensors, and even possible future applications of molecular nanotechnology such as biological machines).
• Nanomagnetics: the study of the magnetic response of nanomaterials to an applied magnetic field, and their applications.
• Nanomechanics: a branch of nanoscience studying fundamental mechanical (elastic, thermal and kinetic) properties of physical systems at the nanometer scale.
• Nanofiltration: a membrane filtration process used for the softening of water and the removal of organic matter; includes nano-membranes.
• Nanotools: multi-component tools and devices used for manipulation, nanolithography and nanofabrication.
• Nanoinstruments or –devices: multi-component instruments or devices used for observation, analysis or control of matter at the nanometer scale.
• Nanomanufacturing: intentional synthesis, generation or control of nanomaterials, or fabrication steps in the nanoscale, for commercial purposes.
• Nanobiotechnology: application of nanoscience or nanotechnology to biology or biotechnology. This includes the application of nanotechnology to human health and veterinary science.
• Bionanotechnology: application of biology to nanotechnology, i.e. the use of biological molecules in nanomaterials, nanoscale devices or nanoscale systems.
• Catalysis: the study and application of catalytic process that are based on nanotechnology-enabled components.
• Software for modelling and simulation: the development and application of software for the modelling and simulation of nanoscale phenomena (i.e. phenomena occurring at a length scale between 1 nm and 100 nm).
Include the total cost of an R&D project with nanotechnology applications in the calculation for this question even if the project has other applications. This means that the percentages reported in Questions 5-24 through 5-27 could sum to more than 100%.
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5-27 What percentage of the amount reported in Question 5-16 was for artificial intelligence (AI)?
Artificial Intelligence (AI) – A branch of computer science and engineering devoted to making machines intelligent. Intelligence is that quality that enables an entity to perceive, analyze, determine response and act appropriately in its environment.
Systems with artificial intelligence perform functions including, but not limited to, speech recognition, machine vision, or machine learning:
• Speech recognition transforms human speech into a format useful for computer applications (for example, a digital assistant)
• Machine vision uses sensors and software that allow images to be used as an input for computer applications (for example, systems that sort or inspect objects or support navigation in mobile equipment)
• Machine learning uses statistical software and data to “learn” and make better predictions without reprogramming (for example, recommender systems for websites, or sales and demand forecasting)
Artificial Intelligence technologies also include virtual agents, deep learning platforms, decision management systems, biometrics, text analytics, and natural language generation and processing.
Include the total cost of an R&D project for AI in the calculation for this question, even if the project has other applications. This means that the percentages reported in Questions 5-24 through 5-27 could sum to more than 100%.
Domestic R&D performed by your company that was paid for by the U.S. federal government
5-28 Copy the amount from Question 3-8, line d. This is the domestic R&D performed by your company that was paid for by the U.S. federal government.
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5-29 How much of the amount reported in Question 5-28 was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding of a given topic without a specific commercial application in mind, or “applied”, where the goal is to solve a specific problem or meet a specific commercial objective.
• Development is defined as the systematic use of research and practical experience to produce new or improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
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5-30 If you reported any research in Question 5-29, line a, how much was for the following categories?
• Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Applied research has the goal of solving a specific problem or meeting a specific commercial objective. Basic research has the goal of acquiring new knowledge or understanding of a given topic without a specific commercial application in mind.
For example, a project that aims to investigate the influence of different materials on fuel cell efficiency would be classified as basic research. A project that aims to improve fuel cell efficiency using new materials would be classified as applied research.
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5-31 What percentage of the amount reported in Question 5-28 was for software products or software embedded in other projects or products?
See definitions in “Research and development activity in software” under guidance for Question 2-1. Include R&D in software for both packaged software that is sold/licensed to consumers as well as R&D in software for internet applications that generate revenue. This includes R&D in software developed specifically for an R&D project that has no alternative future use as well as R&D in software that is developed to be installed or run in other products sold by the company.
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Characteristics of foreign R&D performed by your company that was paid for by others
5-32 Copy the amount from Question 3-5, column 2. This is the foreign R&D performed by your company and paid for by others.
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5-33 How much of the amount reported in Question 5-32 was for the following categories?
Research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge or understanding of phenomena and observable facts. Research may be either “basic”, where the goal is primarily to acquire new knowledge or understanding
of a given topic without a specific commercial application in mind, or “applied”, there the goal is to solve a specific problem or meet a specific commercial objective.
Development is defined as the systematic use of research and practical experience to produce new or significantly improved goods, services, or processes. In simple terms, the intended output of research is ideas and the intended output of development is products.
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Section 6: Human Resources
6-1 How many employees reported in Question 1-9 were R&D employees and how many were all other employees?
Question 6-1 asks the company to report how many of its employees were R&D employees.
R&D employees include all employees who work on R&D or who provide direct support to R&D, such as researchers, R&D managers, technicians, clerical staff, and others assigned to R&D groups. Exclude employees who provide only indirect support to R&D, such as corporate personnel, security guards, and cafeteria workers.
Counts of (1) Domestic operations, (2) Foreign operations, and (3) Total employees should be recorded for:
a. R&D employees
b. All other employees
c. Total employees
NOTE: The total employees line should equal the total for Question 1-9.
The wages of the R&D employees reported in this question are included in the costs reported in Sections 2 and 3 of this survey.
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6-2 How many employees reported in Question 6-1 ,column 1, were employed in each state (including D.C.)?
When reporting counts of employees by location (country or state), assign workers to the business establishment to which they report. For employees who telework or travel frequently, this is typically the establishment where their manager is located or where their payroll is assigned.
Example: USA Tech LLC is a consulting company with a single physical office in Boston, MA. The company employs people who work remotely from Texas and California. For Question 6-2 this company should report all its employees in Massachusetts.
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6-3 How many of the R&D employees reported in Question 6-1, column 2, were employed in each location (including Puerto Rico)?
When reporting counts of employees by location (country or state), assign workers to the business establishment to which they report. For employees who telework or travel frequently, this is typically the establishment where their manager is located or where their payroll is assigned.
Countries and territories by region
As defined by the Business Enterprise Research and Development Survey
Note: OWH = Other Western Hemisphere. ‘Latin America/OWH’ includes Bermuda and the geographical regions of the Caribbean, Central America, and South America.
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6-4 How many of the R&D employees reported in Question 6-1, line a, were female employees and male employees?
Question 6-4 asks the company to report its total R&D employees based on their sex and location
6-5 How many of the R&D employees reported in Question 6-1, line a, worked in the occupations listed below?
The distinction between the different occupation categories is defined primarily by the nature of the employee’s work, not the employee’s level of education. Researchers are professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems and also in the management of the projects concerned. Include R&D managers in the “Researchers” category.
R&D technicians and equivalent staff are persons whose main tasks require technical knowledge and experience in one or more fields of science or engineering, but who contribute to R&D by performing technical tasks under the supervision of researchers. Biostatisticians supporting clinical trials should be reported in this category even though they may hold PhDs in their field.
The main distinction between researchers and technicians is that researchers contribute more to the creative aspects of R&D whereas technicians provide technical support. For example, a researcher (scientist or engineer) would design an experiment and a technician would run the experiment and assist in analyzing results.
R&D support staff is not directly involved with the conduct of a research project, but support the researchers and technicians. These employees might include clerical staff, report writers, regulatory experts, quality assurance, safety trainers, and other related employees.
Many Contract Research Organizations provide largely technical, regulatory, and administrative support to their customers for clinical trials. Most of these companies’ R&D employees should be reported as R&D technicians or R&D support staff.
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6-6 How many of the researchers (i.e., R&D scientists, engineers, and managers) reported in Question 6-5, line a, had the following level of education?
Question 6-6 asks the company to specify how many of the employed R&D scientists, engineers, and managers have a PhD.
6-7 Of the domestic R&D employees reported in Question 6-1, line a, column 1, what was the number of full-time equivalents (FTEs) for R&D activity for full-time R&D employees, other full-time employees not working solely on R&D, and part-time employees?
The headcount of full-time equivalent R&D employees should be adjusted to account for employees who work part-time as well as those employees who split their time between R&D and other activities. The purpose of this question is to accurately measure the amount of effort employees are devoting to R&D activities
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6-8 Of the domestic researchers reported in Question 6-5, line a, column 1, what was the number of full-time equivalents (FTEs) for R&D activity for full-time R&D employees, other full-time employees not working solely on R&D, and part-time employees?
The headcount of scientists and engineers should be adjusted to account for employees who work part-time as well as those employees who split their time between R&D and other activities. The purpose of this question is to accurately measure the amount of effort scientists, engineers, and their managers are devoting to R&D activities.
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6-9 How many of the domestic researchers reported in Question 6-3, line a, column 1, were non-U.S. citizens employed in the United States under a temporary visa, such as H-1B or L-1?
Question 6-9 asks how many domestic researchers are employed in the United States under a temporary visa.
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6-10 In addition to the R&D employees reported in Question 6-1, line a, how many leased employees and temporary staff, including on-site consultants, worked in the occupations listed below?
The distinction between the different occupation categories is defined primarily by the nature of the employee’s work, not the employee’s level of education. Researchers are professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems and also in the management of the projects concerned. Include R&D managers in the “Researchers” category.
R&D technicians and equivalent staff are persons whose main tasks require technical knowledge and experience in one or more fields of science or engineering, but who contribute to R&D by performing technical tasks under the supervision of researchers. Biostatisticians supporting clinical trials should be reported in this category even though they may hold PhDs in their field.
The main distinction between researchers and technicians is that researchers contribute more to the creative aspects of R&D whereas technicians provide technical support. For example, a researcher (scientist or engineer) would design an experiment and a technician would run the experiment and assist in analyzing results.
R&D support staff is not directly involved with the conduct of a research project, but support the researchers and technicians. These employees might include clerical staff, report writers, regulatory experts, quality assurance, safety trainers, and other related employees.
Many Contract Research Organizations provide largely technical, regulatory, and administrative support to their customers for clinical trials. Most of these companies’ R&D employees should be reported as R&D technicians or R&D support staff.
Section 7: Tax Topics 7-1 Did your company file for the tax credit for increasing research activities (IRS Form 6765) in 2019?
Note: Qualifying research expenditures as defined for this tax credit are not directly comparable to R&D expenditures collected elsewhere in this survey.
7-2 Did your company file for a State tax credit for research activities in 2019?
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